Employers in Canada shift away from benefit expansion amid rising health care costs
Rising benefit costs have overtaken all other concerns in 2025, with 73 percent of Canadian employers citing them as the top influence on their benefits strategy, according to WTW’s 2025 Benefits Trends.
That marks a steep increase from 40 percent in 2023.
As reported by WTW, employers are not expanding their benefit portfolios but are instead trying to extract more value from current offerings.
Strategies include improving financing, administration, analytics and employee experience.
In the next three years, 55 percent of employers plan to reallocate or rebalance spending—up from just 10 percent in the prior year.
Meanwhile, 64 percent intend to switch to better-value vendors or enhance value across health, retirement, and risk benefits, and 44 percent will focus on managing high-cost medical conditions.
Mental health remains a pressing concern.
According to the survey, 55 percent of employers identified it as a priority issue, followed by competition for talent (54 percent), expectations around employee experience (43 percent), and cost of living (32 percent).
To address these challenges, employers are concentrating efforts over the next three years on mental health, financial wellbeing, health and retirement benefits, and maximizing value.
As per the findings, many organizations plan to expand their use of targeted communication and behavioural nudges, while implementing navigation solutions to improve employee experience.
Regular vendor performance reviews, including employee feedback, are also being prioritized.
The rising cost of medical care is another constraint.
WTW reported that 32 percent of employers face difficulties delivering on wellbeing programs, 30 percent on leave benefits, and 26 percent on health benefits.
Anne-Marie Nawar, Canadian Health & Benefits Insights & Solutions Leader at WTW, said employers are reassessing priorities “after a long period of high benefits inflation and in the face of a possibly weakening economy.”
She added that they are targeting support and spending on benefits that matter most, with the goal of enabling personalisation and helping employees make informed decisions.
Nawar added that while progress is underway, more effort is still needed. She said organizations are under increasing pressure to deliver “the right benefits strategy.”
She noted that reallocating spending and exploring new solutions is a start, but challenges remain as employers work to address key pressure points.
As per WTW, the survey was conducted between March and April 2025, with responses from 145 Canadian employers spanning both private and public sectors
